Deputy governor's rate rise vote

BANK of England deputy governor Mervyn King bucked the trend earlier this month to vote for an increase in interest rates, it emerged today.

Eight members of the nine-strong Monetary Policy Committee voted in favour of keeping the cost of borrowing at a 38-year low when they met on July 3 and 4.

According to the minutes of the meeting, published today, new member Marian Bell was one of those to favour holding rates steady at 4%. This was Miss Bell's first meeting since replacing arch-dove Sushil Wadhwani, who stepped down after a three-year term on June 1.

But Mr King, deputy governor responsible for monetary policy, voted against and instead opted for a 0.25% rise.

The MPC conceded that the arguments for raising rates in the near future remained relevant. In particular, it said the record low rates were continuing to stimulate the economy while the outlook had 'clearly strengthened' since the rate was reduced to its current level.

But despite this, the majority decided to keep interest rates on hold once more. The MPC cited the uncertain strength of the global economic recovery while volatile equity markets also played a part.

The MPC said: 'The downside risks might now be greater as a consequence of increased financial market nervousness set alongside the existing longer-term economic imbalances in the United States.'